The home appraisal is one of the most important steps in the VA loan home buying process. During the appraisal, a VA-approved home appraiser will determine the current market value of the property being purchased.
But that’s only one aspect of the VA home appraisal process. In addition to estimating the value, the appraiser will examine the property to make sure it meets the VA’s Minimum Property Requirements, or MPRs.
According to the Department of Veterans Affairs, which manages this loan program, the MPRs are intended to “protect the interests of Veterans, lenders, servicers, and VA.”
Minimum Property Requirements for VA Loans
VA home loans are backed by the federal government. The U.S. Department of Veterans Affairs provides mortgage lenders with a partial guarantee that gives them added protection from losses relating to borrower default.
Because of their involvement, the department also establishes minimum property requirements for homes being purchased with a VA-guaranteed loan. These requirements can be found in chapter 12 of “VA Pamphlet 26-7,” the official handbook for their loan program.
But these appraisal guidelines are not as strict as some people think. There’s a widespread misconception that these minimum property requirements are overly stringent, and that the appraisal process itself is highly invasive. Neither of those things are true.
In fact, when it comes to their minimum property requirements for homes, the VA is mostly concerned with three things. As is states in chapter 12 of the handbook, the “MPRs help ensure that the property is safe, structurally sound, and sanitary.”
Here’s another way to think of it:
A new or well-maintained home should have no appraisal issues whatsoever. An older home with general “wear and tear” and a few items in need of repair can still be eligible for VA home loan financing. But a home with serious structural flaws, sanitation issues, or other safety concerns probably won’t meet the VA’s minimum requirements.
The good news is that most homes on the market tend to fall into one of the first two categories above. They’re either (A) new or well-maintained properties or (B) older homes with minor issues. It’s the third category you have to watch out for, if you’re planning to use a VA loan.
Overview of Minimum Property Requirements
So, what are the minimum property requirements for VA loans? The full list is available in VA Pamphlet 26-7, which you can find online.
Here are some of the highlights:
- Safe and Sanitary Conditions: The property must be in a safe and sanitary condition. This means it should be free from health and safety hazards that could pose a risk to occupants.
- Structural Integrity: The home must have sound structural integrity. It should be free from major defects that could affect its safety or livability.
- Roof and Attic: The roof should be in good condition, and the attic should have proper ventilation. Any roof issues that could lead to leaks or significant damage may need to be addressed.
- Heating and Cooling Systems: The property must have a functioning heating system capable of maintaining a minimum temperature of 50 degrees Fahrenheit in winter. Cooling systems are not required, but if present, they should be in working order.
- Plumbing and Electrical Systems: Plumbing and electrical systems should be in good condition and meet local building codes. Any major issues, such as leaks or faulty wiring, should be addressed.
- Water Supply: There should be a safe and potable water supply with adequate pressure and flow to meet the needs of the home.
- Sewage Disposal: The property must have a safe and effective sewage disposal system.
- Lead-Based Paint: If the home was built before 1978, it should be free from lead-based paint hazards that “expose the subsurface to the elements.” This might require inspection and remediation if lead-based paint is present.
- Termite Inspection: In certain areas with a history of termite infestation, a termite inspection may be required. If termite damage is found, it must be addressed.
- Private Well and Septic Systems: Properties with private well and septic systems must meet local health department regulations and be in good working order.
- Crawl Spaces and Basements: These areas should be dry and free from moisture issues that could lead to mold or structural problems.
- Environmental Hazards: The property should not be located in an area with environmental hazards that could affect health or safety.
- Local Building Codes: The property should generally comply with local building codes and zoning laws.
As you can see, most of this stuff is fairly basic. Of course you want your new home to be structurally sound with functional plumbing and electricity, and located away from any environmental hazards.
In short, the VA loan program is designed to support homes that are move-in ready. It’s not meant for properties that need extensive work just to make them habitable.
Some Tips for Home Buyers
As a home buyer, there are certain things you can do to improve your chance for finding a property that meets the VA loan MPRs.
For starters, you could focus on properties that are located in well-maintained neighborhoods. The VA appraiser will consider the condition of the neighborhood when evaluating the property, so it helps to choose a home in a desirable area.
You could also look for homes that have been recently renovated. The VA requires that all properties be in good condition, so homes that have been recently renovated are more likely to meet the MPRs.
Try to avoid properties with major repairs or defects. If the property has serious structural issues or other safety/habitability issues, it will likely fail the appraisal.
Lastly, consider working with a real estate agent who is experienced with VA loans. A good real estate agent will be able to help you find homes that meet the VA MPRs and will be able to guide you through the VA loan process.